The first quarter is historically the quarter with the lowest sales of the fiscal year, as sales are heavily weighted towards the second half of the calendar year leading up to the beginning of the school season. As expenses are more evenly distributed over the course of the year, the Company generally reports a net loss in the first quarter of each year. For the first quarter in 2014, the net loss is $3.1 million, compared to a net loss of $1.8 million in the first quarter of 2013.

Revenue

Total revenue for the first quarter decreased by 7.8% to $7.3 million in 2014 compared to $7.9 million in the corresponding quarter of 2013.

The Higher Education Division sales remained consistent at $4.2 million in the first quarter of 2014 when compared to the first quarter of 2013.

The School Division sales decreased by $0.2 million to $2.0 million in the first quarter of 2014 from $2.2 million in the corresponding quarter of 2013 as a result of non-recurring adoptions in 2013 in Ontario and the Atlantic provinces.

In the Professional Division, sales decreased by $0.3 million in the first quarter of 2014 to $0.8 million due to a decrease in the wholesale market.

Other income, representing billed freight, copyright licensing, commission on foreign sales, and translation fees, decreased in the first quarter of 2014 by 22.8% to $0.2 million from $0.3 million in the corresponding quarter of 2013.

Rental income from the tenant at the Company's Whitby, Ontario facility decreased slightly to $0.1 million in the first quarter of 2014 compared to $0.2 million in the first quarter of 2013 as a result of the lower escalation charges to our tenant.

Expenses

Cost of goods sold decreased by $0.2 million to $2.5 million in the first quarter of 2014 from $2.7 million in the corresponding quarter of 2013 which is consistent with the lower revenues.

Operating expenses increased slightly for the first quarter to $6.5 million compared to $6.4 million for the same quarter in 2013. The increase is a result of increased professional fees.

Amortization expense for pre-publication costs decreased by $0.5 million to $0.3 million in the first quarter of 2014 from $0.8 million in the corresponding quarter of 2013. Depreciation expense for capital assets in the first quarter remained consistent at $0.2 million.

The Company has listed its building located in Whitby, Ontario for sale as of March 31, 2014. The asset has been recorded at market value and an impairment of the asset was recorded for $1.4 million.

Finance income increased $0.03 million as a result of higher cash balances in the first quarter of 2014 than in the first quarter of 2013. Finance costs, consisting mainly of banking charges, in the first quarter of 2014 remained consistent with the same quarter of 2013.

In the first quarter, the Company reported a foreign exchange loss of $0.2 million compared to a $0.1 million loss in the same period of 2013. The Company incurs foreign exchange gains and losses throughout the year as a result of the volume of related-party transactions, most of which are denominated in U.S. dollars. The Company continues to employ policies to minimize the impact of these currency fluctuations.

Net loss increased to $3.1 million from $1.6 million in the first quarter of 2013, mainly driven by the impairment on asset. Excluding the impact of impairment, net loss of $1.7 million is consistent with 2013.

Cash increased to $21.8 million as of March 31, 2014 from $10.2 million in 2013. This increase was generated from operations.

The Corporation and McGraw-Hill Global Education Holdings, LLC ("McGraw-Hill Education") announced on April 17, 2104 that they have entered into a definitive acquisition agreement pursuant to which McGraw-Hill Education will indirectly acquire all of the outstanding common shares of McGraw-Hill Ryerson that it does not already own at a price of C$50.00 cash per common share. Investmentaktiengesellschaft für langfristige Investoren TGV, owner of approximately 12.5% of the outstanding common shares of McGraw-Hill Ryerson, has separately entered into an agreement with McGraw-Hill Education to vote its shares in favour of the transaction at a special meeting of McGraw-Hill Ryerson shareholders to be held to approve the transaction.

The attached financial statements have been prepared by management of McGraw-Hill Ryerson Limited. The financial statements for the three month period ended March 31, 2014 and March 31, 2013 have not been reviewed by the auditors of McGraw-Hill Ryerson Limited.

In business since 1944, McGraw-Hill Ryerson Limited is a leading Canadian publisher of educational resources, and information products and services for lifelong learning and enjoyment. Total revenue in 2013 was $71 million. Additional information is available at http://www.mheducation.ca.

McGraw-Hill Ryerson LimitedIncorporated under the laws of Ontario

STATEMENTS OF LOSS AND COMPREHENSIVE LOSS(unaudited)

(In thousands of dollars―except per share data)

Three months ended March 31

2014

2013

Revenue

Sales revenue, less returns

6,884

7,387

Other income

233

302

Rental income

138

182

Total revenue

7,255

7,871

Cost of goods sold

2,495

2,668

Gross profit

4,760

5,203

Operating expenses

6,505

6,442

Amortization, net of impairment-pre-publication costs

330

806

Depreciation-property, plant and equipment

189

201

Impairment loss on assets

1,415

-

Operating loss

(3,679)

(2,246)

Finance income

72

37

Finance costs

(46)

(40)

Foreign exchange loss

(168)

(71)

Loss before income taxes

(3,821)

(2,320)

Income tax recovery

(740)

(515)

Net loss for the period attributable to equity holders of the Company

(3,081)

(1,805)

Other comprehensive income (loss)

Actuarial gain (loss) on employee future benefits, net of tax

-

191

Total comprehensive loss for the period attributable to equity holders of the Company